European stocks are expected to open flat on Tuesday ahead of a report on the Spanish banking industry and a raft of earnings from across Europe before the opening bell.
The FTSE 100 was called up 3 points at 5697 at the open, while the DAX was called higher by 11 points at 6785 and the CAC 40 up 2 at 3323.
The big question for investors remains what the European Central Bank and Federal Reserve will do later this week when they meet to decide on borrowing costs and whether or not to take further extraordinary measures.
Mario Monti, the Italian Prime Minister, will travel to Paris Tuesday morning for talks onthe debt crisis with his key ally, French President Francois Hollande.
Overnight data from Japan showed the euro zone debt crisis is hitting Japanese exports, with manufacturing data falling at its fastest pace since last year’s devastating earthquake and tsunami.
Spain will return to the markets’ attention when Deloitte, PwC, E&Y and KPMG deliver the results of an extensive audit of the Spanish banking industry to the government in Madrid later Tuesday.
The results of the audit will go a long way to determining how much money each bank will need from the 100 billion euro ($123 billion) fund set up to shore up confidence in the sector.
The Spanish economy ministry declined to comment to CNBC on what time the results will be made public.
The Spanish Treasury said Monday night the central government’s budget deficit will be 4 percent of GDP for the first half of 2012.
The news should be welcomed by policy makers in Brussels and Frankfurt who want Spain to cut its budget deficit to 6.3 percent for the year.
Spain’s central government debt is not yet the major concern of the market as a number of Spain’s highly indebted regional governments are likely to need government support.
A report in the Spanish daily Cinco Dias says Andalusia will not be one of the regions seeking support to help refinance its debt.
It is a busy day for corporate earnings with major German and Swiss banks set to dominate investor attention.
Swiss bank UBS announced second-quarter pre-tax profits of 951 million Swiss francs ($972 million) which missed analysts’ expectations of 1.12 billion Swiss francs.
There was better news on assets under management with UBS’s wealth management business attracting 13.2 billion Swiss francs of new money for the quarter.
UBS earnings were hit by a 349 million Swiss franc loss related to the Facebook initial public offering.
Overnight Germany’s Commerzbank unveiled profits that missed analyst expectations.
Germany’s second biggest lender is predicting it will make an operating profit of 1 billion euros in the first half following the sale of assets in Eastern Europe.
Deutsche Bank, Spanish bank BBVA and oil giant BP will also announce results before the market open.